EUR/USD: Signs of fatigue for the Euro after the two-day rally

The single European currency is measuring its strength and trading much bellow the 1.10 levels in a calm tone after the amazing rally of the last 2 days in the wake of the Fed & ECB interest rates decisions but mainly due to  Fed's President Powell's statements  who raised the bets on the possibility that the Central Bank will cut interest rates much earlier.

The bullish momentum of the European currency was further supported as in the similar statements yesterday from the President of the ECB Christine Lagarde there was no mention of the thought of reducing the key interest rates ,  something that has now brought to the table that the two main Central banks have different rhetoric at the moment, something that clearly favored the European currency.

Ηowever, as the course of the European economy continues to be problematic and given that the prices of oil and natural gas will remain close to the current levels, the possibility that the contraction of inflationary pressures will have a greater speed is present, so the rhetoric of the European Central Bank could change at any time.

On today's agenda stand out figures for the manufacturing and service sectors in the European and US economy, which are being watched by investors, but without some significant surprise it will be difficult to see a dramatic change in the exchange rate picture, especially in view of the closing of the week.

The scenario that the signs of fatigue of the European currency remain on the table for today is quite possible, as after the two-day rally the pair is expected to digest these levels with possible correction behaviors.

Let's not forget that although the course of the key interest rates is the main catalyst that affects the exchange rate and at the moment the Fed's latest dovish tone working in favor of the euro,  the  problems of the European economy remain on the table and I believe that it is very difficult for today the European currency to continue the same bullish cycle of the last 2 days.

As the opportunity to buy the euro as was my main focus for the past few days is now far removed,  I will keep a wait-and-see stance and consider opening position in favor of the US currency after new highs well above of 1,10.